FTIL & MCX agree to terms of new tech deal

Financial Technologies India Ltd (FTIL) and Multi Commodities Exchange (MCX) will soon sign an agreement to revise the terms of their technology supply contract.

This would end a controversy which began with the special audit report of Price Waterhouse.

The report had said the contract unduly favoured FTIL, which was the anchor investor in MCX. Now, said a source, FTIL has agreed to reduce its annual maintenance charge by 40 per cent, an exit route has been provided and MCX gets the flexibility to have another technology vendor.

MCX had appointed a committee of independent directors to renegotiate contract terms with FTIL. After a few months of discussion, FTIL agreed to reduce annual charges from Rs 5 crore to Rs 3 crore. MCX also has to pay volume-based charges, which will continue. However due to a sharp fall in volumes, the fee payment to FTIL has fallen significantly.

The Forward Markets Commission, regulator for the commodity derivatives market, had asked MCX to renegotiate the contract. The one in question was for 33 years and renewable after that for another 33 years. Any closure in between meant a heavy penalty on MCX.